EBay Stock Slides After Analysts Warn of Slowing Ad Revenue Growth

Key Takeaways

Shares of eBay ( EBAY ) fell after analysts at Jefferies downgraded the auction site Tuesday based on slowing advertising revenue growth.

The firm dropped eBay to “underperform” from “hold” and lowered its price target to $52 from $60. That’s an 18% discount even after the company's stock slid 3% to $63.09 intraday Tuesday.

“We see decelerating advertising revenue combining [with] increased marketing investments for sluggish profit growth,” the analysts said.

Analysts added the company is “a key ecommerce player, but has been unable to deliver sustainable progress towards a core marketplace turnaround.”

Advertising growth dipped from 23% in the fourth quarter of 2023 to 7% in the third quarter of 2024. That’s due in part to eBay’s reliance on offsite promoted advertisements as opposed to core-onsite advertising, since the former requires eBay to pay for ad placement, Jefferies said.

China Growth is Slowing

Jeffereis also noted that revenue growth from China fell from 26% in the third quarter last year to 10% this year. If that trend continues, it could become a headwind, the firm said.

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